Revenue churn is a huge indicator of growth potential. That’s because, even when companies have significant customer churn, they can overcome it with expansion revenue. When you have that, combined with success in new customer acquisition, you have a growth machine that will be hard to slow down. It’s a recipe for success.
SaaS businesses grow at the intersection of customer acquisition and lifetime value. When customers churn they cut short lifetime value and upend the fundamental driver of healthy growth
I will sacrifice luxurious features, chalk them up as ‘nice to haves’, and go with thinner, less cumbersome solutions. I’d much rather have 80% of the features run well 100% of the time than the inverse.
When the ratios are off…for example too many salespeople for available marketing spend; or too many marketing team members for the available spend and lead requirements; the whole program is destined to fail. There’s no way to bring in a reasonable CAC because sales will never have enough leads to work and marketing wages will be far too high per lead to make fully loaded CPL business-reasonable.
Even when you manage an efficient income statement, low liquidity in your balance sheet can keep you up at night. Since even founders need to sleep (a little), we need ways to shore up that liquidity without ceding board control or mortgaging our homes.
When I was running ion interactive, I excused my personal inconsistent content production by maintaining that it was less important that managing the company. Perhaps that was true. But, perhaps it wasn’t.
Over many years and incarnations, I learned a lot about how to have a happy and healthy SaaS company. Of the health metrics I focused on most, churn was by far the most important as well as the most complex.
This article looks at the things I like to spend money on and the things I don’t. It looks at a tech company P&L through the lens of dollars spent and their expected upside in growth.
I’ve had thousands of introductory calls with potential investors, bankers and buyers. Here’s the anatomy of my side of those calls.
First of all, we probably (umm definitely) engaged our investment bankers a bit late. But here’s how that process went down and how we made our decision.